’How will we withdraw…’: Hundreds gather outside New India Co-operative Bank after RBI imposes restrictions

The Reserve Bank of India (RBI) has enforced a six-month transaction ban on Mumbai-based New India Co-operative Bank Ltd due to irregularities in its lending practices. In response to the central bank's overnight order, hundreds of account holders rushed to the bank's Mumbai branch at Mira Road East to access their bank accounts and attempt to withdraw cash.

The large turnout prompted authorities to deploy heavy police security at the bank on Friday, February 14. The RBI issued a notice to halt all business at the bank's branch in Maharashtra, barring it from carrying out financial operations without prior approval. Anxious customers waited in long queues outside the branch to speak to the authorities and take the next steps.

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RBI order against New India Co-operative Bank Ltd

In its instructions against the bank, the RBI said,"It is hereby notified for information of the public that the RBI has issued certain Directions to New India Co-operative Bank Limited, Mumbai ("the bank"), whereby, as from the close of business on February 13, 2025, the bank shall not, without prior approval of RBI in writing, grant or renew any loans and advances."

According to RBI's order, account holders cannot make any investment, incur any liability, including borrower of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated February 13.

“Considering the bank's present liquidity position, the Bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions stated in the RBI Directions.”

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New India Co-operative Bank customers struggle to withdraw money

Bhupendra, a New India Co-operative Bank customer, told news agency ANI, “I have been standing in line for two hours... How will we withdraw our money if there's an emergency?... The bank told us that we could withdraw money from the locker. For the rest, there's a six-month waiting period to get our money back... There must be certain measures where customers are not taken for granted.”

Seema Waghmare, another New India Co-operative Bank customer, told ANI, “We deposited money just yesterday, but they did not say anything... They should have told us that this was going to happen... They are saying that we will get our money within three months... We have EMIs to pay, we have no idea how we will do all of that...”

The RBI, however, gave relaxation to the New India Co-operative Bank in respect of certain essential items such as salaries of employees, rent, electricity bills, etc. “These directions are necessitated due to supervisory concerns emanating from the recent material developments in the bank and to protect the interest of depositors,” said the central bank in its notice.

The central bank, in its notice, further directed that depositors would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of ₹5,00,000 in the same capacity and the same right from the Deposit Insurance and Credit Guarantee Corporation (DICGC). RBI said that these directions should not be taken as the cancellation of the banking licence.

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"The bank will continue to undertake banking business subject to restrictions specified in the said Directions till its financial position improves. The RBI continues to monitor the bank's position and will take necessary actions, including modifications of Directions, as warranted, depending upon circumstances and in the interest of the depositors," it said. The RBI added that the directions on the bank will remain in force for six months from the close of business on February 13, and the bank's activities will be reviewed.